Renewable energy, energy efficiency, and economic complexity in the middle East and North Africa: A panel data analysis

Abstract

This paper aims to investigate how economic complexity and structural transformation affect energy security. This study differs from previous research by focusing on energy efficiency and renewable energy transition as indicators of energy security. The employed methods include econometric techniques such as Panel-Corrected Standard Errors, Driscoll and Kraay's Spatial Correlation Consistent (SCC) method, and Generalized Least Squares, covering data from the Middle East and North Africa (MENA) countries between 1990 and 2017. The results show that economic complexity has a negative effect on energy efficiency but a positive impact on renewable energy. However, economic growth positively affects energy efficiency but negatively influences renewable energy. These results imply that economic complexity is energy-intensive but green, whereas economic growth is energy-saving but brown. The comparative analysis reveals that the negative effects of economic complexity and growth are larger than their positive effects, highlighting the necessity of restructuring economic activities and sectors. Accordingly, decision-makers should encourage the utilization of more energy-efficient technologies in economic activities and production, while promoting renewable energy consumption to enhance energy security in the MENA region. • Economic complexity is energy-intensive while promoting renewable energy. • Economic growth is energy-saving while discouraging renewable energy. • The negative effects of economic complexity and growth are larger than their positive effects.

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